Cotton's Week: November 10, 2006

The mid-term elections will give Democrats the control of both the House and the Senate beginning in January when the 110^th Congress convenes.

In the Senate, Democrats will have a 51seat majority. On the House side, the final total will not be known for months, as 11 races are still undecided (four of which are in the Cotton Belt).

New Cotton Belt members of Congress will include Sens. Clair McCaskill (D-MO), Bob Corker (R-TN), Jim Webb (D-VA) and Reps. Harry Mitchell (D-AZ), Gabrielle Giffords (D-AZ), Jerry McNerney (D-CA), Kevin McCarthy (R-CA), Hank Johnson (D-GA), Heath Shuler (D-NC), Mary Fallin (R-OK), Steve Cohen (D-TN) and Nick Lampson (D-TX). 

Both of the parties plan to elect their leadership for the new Congress in the coming weeks. Rep. Pelosi (D-CA) does not appear to have any opposition in her election to Speaker of the House, which would take place in January. Sen. Reid (D-NV) likely will not have any opposition to his election to Senate Majority Leader.

While some committee assignments among members will change with the new Congress, it is expected that Rep. Peterson (D-MN) will become chairman of the House Agriculture Committee and Sen. Harkin (D-IA) will retake the chair of the Senate Agriculture Committee.

In its November crop report, USDA estimated a ’06-07 US crop of 21.3 million bales, up 640,000 bales from its October estimate.

Upland production was estimated at 20.5 million bales and ELS production at 789,000 bales. Harvested area was estimated at 12.8 million acres implying non-harvested area of 2.5 million acres based on USDA’s acreage number. The resulting abandonment rate is roughly 16.1% for the ’06-07 crop. The national average yield per harvested acre is estimated to be 798 pounds, 39 pounds above the 5-year average.

On a regional basis, the Southeast crop is estimated at 4.62 million bales, based on harvested acres of 3.24 million and a regional average yield of 685 pounds, 24 pounds below the region’s five-year average. Only Alabama and Georgia are expected to see a decline in yields when compared to their respective five-year averages. The greatest decline in terms of yield is estimated for Alabama, down 158 pounds to an estimated 538 pounds per harvested acre. Virginia leads the region with expected yields of 822 pounds per harvested acre, 29 pounds above their five-year average.

In the Mid-South,expected production is 8.39 million bales. Harvested area is estimated to be 4.19 million acres and the expected yield is 962 pounds per harvested acre. All states in the region are expected to see an increase in yields. Louisiana is expected to see the greatest yield gain with an estimated increase of 182 pounds over their five-year average.

The Southwest upland crop is estimated at 6.05 million bales. Expected harvested area is 4.53 million acres and the regional average yield is 641 pounds. With 6.83 million acres planted, harvested area for the region reflects abandonment of 34%. Adverse weather conditions during '06 pushed abandonment to the highest level since '98. Oklahoma’s expected yield is estimated at 458 pounds per harvested acre, 175 pounds below their five-year average. Average yields in Kansas and Texas are above their respective five-year averages, in large part due to the increased abandonment.

Upland production in the Westis an estimated 1.45 million bales with an estimated harvested area of 541,000 acres and a regional average yield of 1,288 pounds, 37 pounds less than the region’s five-year average. However, both Arizona and New Mexico’s expected yields are higher than their respective five-year averages.

The ELS crop’s harvested area is pegged at 324,000 acres with an average yield of 1,169 pounds per harvested acre.

U.S. Cotton Crop, 2006-07
	PLANTED ACRES Thou.	HARV. ACRES Thou.	YIELD PER HARV. ACRE Lb.	5-YEAR AVG. YIELD Lb.	480- POUND BALES Thou.
UPLAND
SOUTHEAST	3,355	3,236	685	709	4,618
Alabama	575	535	538	696	600
Florida	105	104	646	599	140
Georgia	1,400	1,330	668	714	1,850
North Carolina	870	865	771	723	1,390
South Carolina	300	298	741	676	460
Virginia	105	104	822	793	178
MID-SOUTH	4,225	4,185	962	865	8,390
Arkansas	1,170	1,160	1,076	946	2,600
Louisiana	630	620	960	778	1,240
Mississippi	1,220	1,210	893	856	2,250
Missouri	505	500	989	899	1,030
Tennessee	700	695	877	811	1,270
SOUTHWEST	6,830	4,530	641	595	6,050
Kansas	115	110	611	516	140
Oklahoma	315	220	458	633	210
Texas	6,400	4,200	651	595	5,700
WEST	545	541	1,288	1,325	1,452
Arizona	210	208	1,338	1,295	580
California	285	283	1,306	1,382	770
New Mexico	50	50	979	896	102
TOTAL UPLAND	14,955	12,492	788	749	20,510
TOTAL ELS	326	324	1,169	1,270	789
Arizona	7	7	891	933	13
California	275	274	1,244	1,317	710
New Mexico	13	13	775	954	21
Texas	31	30	720	987	45
ALL COTTON	15,281	12,816	798	759	21,299
Source: USDA-NASS November Crop Production Report.

For the ’06-07 crop year, USDA’s November report puts US mill use at 5.20 million bales, down 100,000 bales from the October number. The November estimate for exports is increased by 200,000 bales to 16.20 million. Mill use and exports combine for a total offtake of 21.40 million bales. Coupled with production of 21.30 million bales, ending stocks for ’06-07 are projected to be 6.00 million bales for a stocks-to-use ratio of 28.0%.

USDA pegs US ’05-06 cotton production at 23.89 million bales. Mill use and exports were unchanged from the previous month at 5.89 million bales and 18.04 million bales, respectively. As a result, total offtake also was unchanged at 23.92 million. This generates an ending stocks value of 6.05 million bales and a stocks-to-use ratio of 25.3%.

In its world report, USDA projects ’06-07 marketing year production of 115.72 million bales, down 470,000 bales from the October report. World mill use was lowered 100,000 bales from the October report to a projected 120.88 million bales. Consequently, world ending stocks on July 31, ’07 are projected to be 51.05 million bales, for a stocks-to-use ratio of 42.2%.

The ’05-06 world production estimates were lowered 10,000 bales from the previous month to 114.14 million bales. The beginning stocks estimate was unchanged from the previous month at 54.07 million. Adding imports of 44.21 million bales results in a world supply of 212.42 million bales. Estimated world mill use was lowered 10,000 bales to 115.85 million. The estimated world ending stocks for ’05-06 is now pegged at 53.81 million bales. This has a corresponding stocks-to-use ratio of 46.4%.

As of Nov. 5, USDA estimates that 59% of US cotton acres have been harvested, up from 50% for the previous week. For the US, the report indicates that current progress is in line with the five-year average of 60%. However, state-level numbers show notable deviations from average levels. Harvest in Mississippi is almost complete at 99%, as compared to a five-year average of 86%. Alabama, Georgia, North Carolina and Tennessee are progressing ahead of the five-year pace, while harvest in Texas and California is slightly behind the average pace.

USDA reports that 8.74 million running bales have been ginned as of Nov. 1. This compares to 8.76 and 8.69 million running bales in '04 and '05, respectively. Mississippi leads the way with 1.72 million bales ginned, followed by Texas with 1.59 million and Arkansas with 1.41 million.

The EPA’s Pesticide Program Dialogue Committee (PPDC) reviewed current and future issues relating to pesticide use.

The federal advisory committee offers a forum for a diverse group of stakeholders to provide feedback to the EPA Office of Pesticide Programs on various pesticide regulatory, policy and program implementation issues.

Los Banos, CA, cotton producer Cannon Michael is a PPDC member and participates in the PPDC’s workgroups on worker safety and spray drift.

The session’s agenda included updates from EPA staff on chemical registrations, the Agency’s ongoing review of the Worker Protection Standard and how the Endangered Species Act is factored into the oversight of pesticide use.

In the plenary meetings, EPA briefed PPDC members on regulation and enforcement developments. Under the new “Registration Review” system, for example, all chemical registrations will be re-assessed every 15 years.

The Worker Protection Standard also is under review, and the Agency plans to formalize a revised standard by Dec. ’08. As the Office of Pesticide Programs makes determinations on how to construct new regulations on issues such as worker safety, the PPDC forum enables the cotton industry to weigh in on important matters.

Several informative workshops and symposiums will be offered at the ’07 Beltwide Cotton Conferences, Jan. 9-12 in New Orleans. Among those sessions are “Precision Cotton – Decision Aids to Site-specific Management,” “Plant Bug and Stink Bug Management,” “Recognizing and Diagnosing Your Cotton Disease Problems,” “Effectively Managing an Unseen Foe: Nematodes on Cotton,” “Introduction to Options and Hedging,” “Advanced Options,” and “Cotton Record Keeping Seminar: Laying the Groundwork to Finding Your True Cost of Production.” The “New Developments from Industry Sessions” will include updates on varieties, harvesting & ginning equipment, new chemistry and other new technology.

Meanwhile, the Cotton Production Conference’s general session will feature a producer’s and a merchant’s perspective of a China tour by a delegation of US cotton industry leaders in the China Leadership Exchange Program. The general session also will cover such timely topics as normal/deficit irrigation strategies, herbicide resistance management and farming with high input costs. It will provide updates on bio-fuels, transgenic varieties developments and sustainability as well as farm and trade policy.

Potential conferees are encouraged to register online and to make their housing reservations by going to the BWCC web site, http://www.cotton.org/beltwide. The room block at the New Orleans Marriott is sold out but rooms still are available at the other conferences’ headquarters hotel, the Sheraton New Orleans.

Net export sales for the week ending Nov. 2, ’06 were 180,900 bales (480-lb). This brings total ’06-07 sales to almost 4.4 million. With the purchase of 1.0 million bales, Mexico continues to lead the way as the largest export buyer. China follows closely with purchases of 865,000 bales.

Total sales at the same point in the ’05-06 marketing year were approximately 7.7 million bales. Total new crop (’07-08) sales are 179,300 bales.

Shipments for the week were 133,400 bales, bringing total exports to date to 1.8 million bales, compared with the 3.0 million bales at the comparable point in the ’05-06 marketing year.

Adjusted World Price, SLM 11/16	42.87 cents	*
Coarse Count Adjustment	0.00 cents
Marketing Loan Gain Value	9.13 cents
Import Quotas Open	8
Step 3 Quotas (480-lb. bales)	850,594
ELS Payment Rate	0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 3135 c.i.f. Northern Europe	58.97 cents
Forward 3135 c.i.f. Northern Europe	NA
Coarse Count c.i.f. Northern Europe	NA
Current US c.i.f. Northern Europe	59.60 cents
Forward US c.i.f. Northern Europe	NA
2005-06 Weighted Marketing-Year Average Farm Price
Final Marketing-Year Average Price	47.70 cents